THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

GLORIA BORGER, CNN ANCHOR: Can Washington get back on track?

(BEGIN VIDEOTAPE)

BORGER (voice-over): Today --

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Argue for your position. Go out there and win an election. Push to change it but don't break it.

BORGER: There are new deadlines in December, January, and February. A chance for change?

UNIDENTIFIED MALE: We're not going to shut down the government again. I guarantee it.

BORGER: Our Sunday exclusive with republican senator, John McCain. And, with the man who says not so fast.

CRUZ: This is a terrible deal.

Leading the charge to gut Obamacare and leaving his party splintered in his wake. Our Dana Bash with Tea Party favorite, Texas Republican, Ted Cruz.

Then, what's next for the Tea Party? Our political panel weighs in on the fiscal fiasco the flawed health care launch and the 2014 midterms.

This is STATE OF THE UNION.

(END VIDEOTAPE)

BORGER (on-camera): And good morning from Washington. I'm Gloria Borger in for Candy Crowley. Despite a failed effort to defund Obamacare that resulted in bringing much of the government to a stand still for 16 days, Senator Ted Cruz isn't giving up the fight. And even though he isn't winning many friends here in Washington, Republicans in his home state are standing by their man.

Cruz received a hero's welcome Saturday at a Texas convention of Republican women. And CNN's chief Congressional correspondent, Dana Bash, was there and spoke with the freshman senator right after that event. Dana, that was quite a hero's welcome, right? DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: When I saw Ted Cruz walked in to that room, I was looking for a rock star not a senator. It was really unbelievable. Eight hundred Texas Republican women, and they greeted him, really, as a hero not as a senator. His fellow Republicans here in Washington have open disdain for.

I asked Ted Cruz about some of that criticism from his own party, the likes of which I have rarely seen in Washington, including from John McCain who called what Senator Ted Cruz did a fool's errand, a deception of the American people which he says he resents.

(BEGIN VIDEOTAPE)

CRUZ: Well, look, I respect and admire John McCain. He is a war hero. He is a man of incredible personal courage. I will say this, when you've got Senate Republicans saying we cannot win, we will surrender, this is a fool's errand, it sabotages the effort. In my view, I think the House Republicans marched out on principle to say we're listening to the people who are hurting because of Obamacare and I wish that Senate Republicans had come in like the cavalry to support them.

Instead, they made a different decision. They made a decision not just not to support the House Republicans, but to come in like an air force and dive bomb them. You know what I think has hurt Republicans? All of the Senate Republicans who have attacked House Republicans, who have gone on television --

BASH: I think he's talking you about, sir, not House Republicans.

CRUZ: But look, he's talking about everyone who is engaged in this fight.

(END VIDEOTAPE)

BORGER: And we're going to have more of Dana Bash's interview with Sen. Cruz in a moment. But joining me now is the man he was talking about and criticizing quite directly, that's Senator John McCain. Thanks for being with us this morning, senator. You heard what Senator Cruz said. He said he wanted you to be the cavalry to come in and save them and instead you lost the fight for him. So, are you to blame here?

MCCAIN: Well, there's a lot of ironies here because there were some of us and Republican senators that fought for 25 days against Obamacare up until Christmas eve morning. Campaigned across America in 2012 saying that as we elect Mitt Romney, we will repeal and replace Obamacare.

We were the leaders in the fight during that time. The point is, though, that it would require 67 Republican votes in the United States Senate in order to override a presidential veto in the case of repeal of Obamacare.

So, we take a backseat to no one, certainly I don't in my efforts against Obamacare. And the -- many ironies here, but one of them is the fiasco of this rollout has been obscured because of -- strike that's been going on in the Republican Party. So, we will continue, I think, to try to get rid the worst aspects of Obamacare including the medical device tax and others.

But it was a fool's errand to start with. It was never going to succeed. And the damage, this was not an academic exercise. the damage done to the people of this country, particularly in my state where we're dependent on the tourist industry and places like the Grand Canyon, there's a town called Tucson outside the Grand Canyon, hundreds of people then we had to have food banks send up meals for them because they live on minimum wage. Look, we can't do this to the American people.

BORGER: Do you blame Ted Cruz? Do you blame Ted Cruz for that?

MCCAIN: I blame the whole effort. I blame the whole effort.

BORGER: Well, he led it.

MCCAIN: Which as I said was not going to -- well, all of those involved in it went on a fool's errand. That's just the fact. The other irony is that, in the polling data, national polling, Republicans are at an all-time historic low in approval or historic high in disapproval by the American people.

BORGER: So, what does this do to your brand? I mean, what does this do to the Republican Party brand then?

MCCAIN: Well, it's hurt. The question is, how deep and how long? But the point is that what we need to do, move forward with immigration reform, get a positive agenda for America, continue the fight against Obamacare, get taxes down, address this whole issue of sequestration which is devastating our military.

There are so many things we can do in a positive agenda and get off of this. Keep up the fight against Obamacare, but don't shut down the government and have so much collateral damage --

BORGER: Well, Senator Cruz says he's not ruling out a second shutdown. You know, he hasn't ruled it in. He says he's not ruling it out. Can he possibly do that?

MCCAIN: I think that he can exercise his rights as a senator, but it will not happen.

BORGER: Why?

MCCAIN: The American people will not stand for another one of these things. They just won't.

BORGER: How can you prevent it, though?

MCCAIN: Too much damage.

BORGER: How do you prevent that? MCCAIN: I think the American people have spoken and will continue to speak very loudly. We did this back in 1995. I've seen this movie before. It was another many years before we tried it again. And I am very confident the American people will not stand for another reputation of this disaster.

BORGER: Can I just talk about the Republican Party again for a second, because there are outside groups here, you know who they are, many with ties to Ted Cruz who are raising millions of dollars for Tea Party candidates off of this whole shutdown controversy. And some of them including your former running mate, Sarah Palin, are talking about primary opponents for Mitch McConnell, for example, the Republican leader in the Senate. And even for your good friend, Lindsey Graham, in South Carolina who's running for re-election. So, what's your response to that? That they want to primary people who actually voted the way you did to end the shutdown. I mean, are there two Republican parties here now in a civil war?

MCCAIN: Well, I think you've got to have straight talk. There are divisions within the Republican Party. We've had them in the past. The Democrat Party before Bill Clinton had them. It's very regrettable because our adversary is not each other and we will probably have to go through this discussion and debate. I just wish it would be respectful. I respect Ted Cruz. I respect these people and their views.

BORGER: But you did call him whacko bird --

MCCAIN: You know -- and I apologize for it. I was reading from an editorial in "The Wall Street Journal." But the point is that we need to be respectful of each other and each other's views. Otherwise, we do damage to the party. I am confident the party of Ronald Reagan will come back strong, will get a positive agenda, will get something that an agenda that United States the party and we can move forward. I am absolutely confident of that.

BORGER: Well, let me switch for a moment to Obamacare which you mentioned before was obscured by this entire fight. Three weeks in, we know there've been huge problems with enrollment, rollout, et cetera. And I know you have fought the program as you were saying earlier, but is the administration being direct enough with the American people about the extent of the problems here?

MCCAIN: Of course not. They won't even tell us how many people have signed up --

BORGER: Well, this morning, they said 475,000 have enrolled, but go ahead.

MCCAIN: I'm glad they finally came through with some -- I'm glad they finally came through with some information. Look, it's been a fiasco. Send Air Force One out to Silicone Valley, load it up with some smart people, bring them back to Washington, and fix this problem. It's ridiculous. And everybody knows that.

BORGER: Well, so do you think that somebody here needs to take the fall, that Kathleen Sebelius, as some have suggested, ought to resign?

MCCAIN: Let's have Congressional hearings. Let's find out who is responsible for this fiasco and then take the appropriate action, in my view. But, look, this is just the beginning of the problems associated with a massive restructuring of one fifth of our economy. And there's going to be a whole lot more problems associated with this before it's done.

That's why we, Republicans, have to keep up the fight, but we have to rival shot it rather than go at it with a meat ax which cannot succeed.

BORGER: So, rifle shot meaning try and repeal parts of it rather than the Ted Cruz strategy? Do you think Ted Cruz --

MCCAIN: Exactly.

BORGER: Do you think he's cynical in doing this?

MCCAIN: I think that Ted Cruz was elected on a commitment to the people of Texas that he would do everything in his power. I respect that. I just knew that it could not succeed and it's just not, as I said, it's not an academic exercise.

MCCAIN: This has harmed the lives of millions of people and thousands of people in my state that I represent. I have an obligation to them to try to prevent that from happening.

BORGER: Let's step back for a moment and talk about what might happen over the next few years of this administration. I want you to listen for a moment to something President Obama said about Republican behavior and then we can talk about it on the other side.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We hear some members who pushed for the shutdown say they were doing it to save the American economy. But nothing has done more to undermine our economy these past three years than the kind of tactics that create the manufactured crisis.

(END VIDEO CLIP)

BORGER: So, does this sound like a president whose building bridges to Republicans?

MCCAIN: No. It doesn't. It's very disappointing. The president felt he had to take a victory lap. Maybe it's not in his DNA to be magnanimous (ph) to his opponents. Mr. President, you won. Now, how about sitting down and let's try and fix some of these problems that are obviously there?

And, by the way, your foreign policy and national security policy is continuing to be a total debacle and United States prestige and standing in the world has never been lower. BORGER: OK. Well, let's talk about some of these issues on the budget now. We've seen Super Committees fail. There is all this great talk now that there might be some kind of a grand compromise. Is there any reason, senator, for us to be optimistic now after the fight you just had that something can actually get done?

MCCAIN: I believe that there's good faith. I think that, you know, republicans weren't the only ones, Gloria, that suffered in this debacle. The president's numbers went down. Democrat numbers went down. Disapproval rates went up. You know, how you said we're down to paid staff and blood relatives. I got a call from my 101-year-old mother. She's angry.

So, the point is that it's in our interests. It's in our interests to sit down and get some of these issues resolved. Everybody knows that we cannot -- this path we're on is unsustainable. So, maybe it will be a small bargain. Maybe we can achieve certain things. I'm most worried about sequestration next year and the devastating effect it's having on our military. I'm telling you, it is having effects that we won't cure for a long time, unless, we fix that.

BORGER: And what about immigration reform which is an issue near and dear to your heart? You've been working on it. Republican Congressman Labrador last week said this. He said, quote, "It would be crazy for the House Republican leadership to enter into negotiations with the president on immigration." What's your response to that?

MCCAIN: My response is that we still -- we're the architects of this comprehensive immigration reform and want you to pass legislation, the House representatives to pass legislation. We can sit down and work this out. Eleven million people living in the shadows in this country is not an acceptable situation.

We urge you to address this issue with us together and we respect your views. But to do nothing, I think, is a grave disservice to the American people and sooner or later, we will have to address this issue in a comprehensive fashion.

BORGER: And one more quick question. I can't help but ask you since you were the party's presidential nominee in 2008, you remember that, right? Ted Cruz clearly thinking about 2016. Do you think he would be an attractive Republican presidential nominee?

MCCAIN: Well, I can't predict what would happen this far in the future --

BORGER: But would he be attractive?

MCCAIN: Well, obviously, he'll be very attractive to many who we just heard from Dana Bash down in Texas. The question is, will our party be able to field a winning presidential candidate and vice president so that we can win the election rather than unfortunately the record of the last couple has not what we want it to be. I can say that from a personal standpoint.

BORGER: All right, senator. Thanks so much for being with us.

And now, we're going to go back to more of Dana Bash's interview with Senator Ted Cruz.

(BEGIN VIDEOTAPE)

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Senator, thank you for having us in Texas.

CRUZ: Dana, it's great to be with you.

BASH: What a rousing reception that you got from the women, the Republican women convention that we were just at. CRUZ: Wow. It was tremendously uplifting. It's really good to be home.

BASH: Obviously, the reason it was so startling to somebody who came from Washington is to see the very big difference between the reception you're getting here at home and in Washington.

CRUZ: Well, it's kind of like D.C. It's just in D.C., they're yelling different things.

(LAUGHTER)

BASH: But does that -- what does that tell you when you come home and you get applause and you get a standing ovation and you get, you know, people treating you with such reverence as opposed to the other things that they're taking back in D.C.?

CRUZ: Look, I think people are frustrated in Texas and all across the country. People are frustrated that Washington politicians aren't listening to them. And they've been frustrated for a long time. A lot of people are hurting because of Obamacare. A lot of people are hurting because they can't find jobs. And Obamacare is the biggest job killer in this country.

A lot of people are hurting because they're losing their insurance and their insurance premiums are skyrocketing because of Obamacare. And Washington politicians are ignoring that. They're not listening to them. And I think the reason why you see Congress at five, 10, 15 percent approval ratings is because D.C. politicians, career politicians aren't listening to the people.

And what you just saw there is people just expressing relief that somebody is actually listening to the people and trying to help give them a voice in Washington.

BASH: Given that, are you planning on doing this again, January 15th, when the current bill that was just passed to reopen the government when it finishes?

CRUZ: There will be time enough to talk about specific strategies, specific tactics. What I can tell you is that I think we need to keep as the top priority providing meaningful relief for all the millions of people.

BASH: But you're very deliberately not ruling it out?

CRUZ: What I'm saying is the top priority -- there are a lot of politicians in Washington that want to put Obamacare behind us, say OK, fine. No more. No more discussing Obamacare. And you know what? The American people are not satisfied with that. Right now, you've got a president who has granted an exemption from Obamacare for big business.

He's granted an exemption from Obamacare for members of Congress. The American people are getting hurt. Young people, single moms, Hispanics, African-Americans, people who are struggling and they're losing their jobs, they're forced into part-time work. They can't afford their health care or they're losing their health care.

What Congress is saying is we're not going to do anything to help you. We caused the problem and we're not going to fix it. And my view, we need to keep as our priority providing real relief for the people who are hurting because of Obamacare.

BASH: As you well know, your fellow Republicans pretty much unanimously agree with you that they want to get rid of Obamacare, but they just realize that it's impossible to do with a Democratic majority in the Senate, with a Democrat named Obama in the White House. Mitch McConnell, your leader in Washington, says it's not going to happen again.

There will be no government shutdown ever again as far as he's concerned. And he hopes that the newer members, like you, you've been in Washington only ten months, have learned a lesson. Doesn't sound like you learned a lesson, senator.

CRUZ: Well, I'll tell you, the lesson I've learned is that what we've seen in the last couple of months has been extraordinary. We have seen millions of Americans rise up. Over two million Americans signed a national petition to don'tfundit.com and melted the phone lines down at Capitol Hill. Just a couple of months, official in Washington scoffed that that might happen.

We also saw the House of Representatives stand up, exercise a profile of courage, listening to the people and saying, we've got to provide real relief from Obamacare for the people who are being hurt from Obamacare. That, again, a couple months ago, all of official Washington said would never happen. Now, the reason this failed was simple.

Senate Republicans didn't unite. You know, you mentioned that you don't think this could ever succeed. Let me ask you a hypothetical. Imagine this same battle played out with one thing different. Imagine if after the House had passed a bill funding all of the federal government but defunding Obamacare. Imagine if Senate Republicans had come together, had United and had stood side by side with House Republicans and had said we're with the American people.

We want to fund our government. We want to fund every aspect of our government, but we want to answer the American people who are being hurt because of Obamacare. We would have ended up with a very different result. The deal this week was a lousy deal for the American people.

(END VIDEOTAPE)

BORGER: And coming up, Senate Republican leader, Mitch McConnell, said that Ted Cruz tactic, quote, "was not a smart play". Cruz's reaction to that when we come back.

(COMMERCIAL BREAK)

BORGER: We're back now with more of CNN's chief Congressional correspondent, Dana Bash's interview with Texas senator, Ted Cruz. And this time, the topic turned to money and politics.

(BEGIN VIDEOTAPE)

BASH: There is a group that you're well aware of maybe people out there aren't necessarily called the Senate Conservative's Fund. It helps defeat GOP incumbents or help people who are running against GOP incumbents. You actually benefited from that last time around. They raised $2.1 million in September.

An enormous amount. This is not an election year, on the heels of this fight on your 21-hour filibuster. And some of your colleagues think that that's what this was about, that this was a ruse to raise money for this group and others in order to take out your fellow Republicans.

CRUZ: You know, Dana, it is amazing how many people in Washington want to focus on politics at the expense of all else.

BASH: Do you deny that? Is that not true?

CRUZ: It's nonsense. But here's the point. Look, talking about that is for a purpose. It's a deliberate strategy and what the strategy is is to change the topic. What they don't want to talk about is Obamacare. They don't want to talk about the substance of Obamacare.

They don't want to talk about all the small business that aren't expanding because of Obamacare, about all the young people who can't get jobs because of Obamacare, about all the people forced into part time work, African-American teenager, single moms, they don't want to talk about people all over this country --

BASH: But you made a lot of money -- was it a money making enterprise?

CRUZ: Not remotely. And listen, this is a deliberate strategy. The strategy in Washington is to launch personal attacks, some of which you read, and to encourage the media to do what a lot of folks in the media like to do which is cover this like it's a Hollywood gossip column. This politician versus this politician. Who's up? Who's down? Who's mad? BASH: Sir, you're the one who's starting to choose sides against your own colleagues.

CRUZ: No. What I'm choosing sides with is the American people. And what I think the focus should be is on Obamacare. Is it working? You know what's striking? In the last two months in the course of this debate over Obamacare, Democrats aren't defending Obamacare. They're not saying, hey, these things working great. They're not saying, hey, it's not killing job.

They're not saying, hey, it's not forcing people into part time work. It's not driving up health insurance premiums. It's not taken away people's health care. And the reason is you can't defend it. On the merits, I mean, there's a reason, Dana, the unions are jumping ship. They're saying let us out, it's not working. There's a reason Democratic senators went to the president and said we want a special exemption for members of Congress because it's not working.

And so, I understand you want to draw me into the back and forth with other Republican senators and that's fun to cover. I'm not interested in playing that game. Do you know what many of the elected officials in Washington are most upset about is that their constituents were calling and holding them accountable.

I can't tell you how many of my colleagues have expressed outrage to me that my constituents are calling me. Dana, we work for our constituents. That's our job.

BASH: But the reason they're frustrated, the constituents, they're calling them is because senators have said this to me, because they thought you were selling them snake oil. It was never going to happen.

CRUZ: You know, they can insure we can't win this fight by going on television constantly and attacking everyone who's standing up to win this fight. That made certain we couldn't win.

BASH: Let's chill down on what some of your colleagues seem to be most upset about. First of all, you referred to the fact that your colleagues were yelling at you red faced about their constituents calling. There were a lot of very animated private lunches with you and your colleagues, correct?

CRUZ: Look, I'm not interested in focusing on the disagreements between politicians in Washington --

BASH: Let me just ask you about this, because one of your colleagues told me it was like an intervention, that there were so many of your colleagues saying, you know, why are you doing this? And really angry at you. And I'm just wondering even on a human level, they told me that you really didn't flinch.

On a human level, that's got to bother you, to be sitting in an institution like the Senate and having your, not Democrats, fellow Republicans, so angry at you.

CRUZ: Dana, not remotely.

BASH: Why?

CRUZ: Because the people I work for are the women and men you just saw. I work for 26 million Texans. That's my job to fight for them. I don't work for the party bosses in Washington. I work for the people of Texas, and I fight for them. The reason people are frustrated all over country is that far too many people get elected and they think they're there to be part of the club.

You know what was very interesting about some of those closed door discussions? What I said in those closed door sessions, I would have said the exact same thing if CNN's camera were sitting in the room. What I say privately to my colleagues is the same thing I say publicly. And you know what's interesting?

Virtually, every person in that room that was criticizing what Mike Lee and I were doing would have said very different things if the camera was in this room, because what they're telling their constituents is very different from what they're saying behind closed doors.

BASH: Do you think Mitch McConnell has been a good leader?

CRUZ: I think Senate Republicans should have united. Senate Republicans should have united and supported House Republicans. The one hypothetical that I really think is worth thinking about is how would this have played differently if when the House stood up and led Senate Republicans had marched into battle side-by-side and said we are united and saying we should fund government.

But we should not fund Obamacare. Now, one of the things that might have played out differently, one of the most revealing exchanges and an exchange you were a part of when you asked Harry Reid about the funding for NIH. When the government was shut down, the House passed 14 bills to fund vital government priorities. The Democrats objected to all of them. They sat on Harry Reid's desk. He wouldn't allow a vote. Every one of them was a clean bill. So you had a bill to fund the veteran's administration.

(CROSSTALK)

BASH: Their strategy won.

CRUZ: It did. But here's why --

BASH: They were successful. They beat you all back.

CRUZ: The question you asked Harry Reid about NIH funding, if you could save just one kid with cancer, wouldn't you want to do that? And his answer which was stunning, why would I want to do that? And then he attacked you personally. Listen --

BASH: Sorry, I'm a big girl.

CRUZ: I have no doubt about that but you know why he attacked? Because he was vulnerable. The position he was saying was unreasonable. President Obama and the Democrats' position throughout this was, we will not negotiate. We will not compromise. Shut it all down. That's not a reasonable position. Now, if Senate Republicans had united and supported House Republicans, if we had 46 Senate Republicans on television every day, in the media every day making the point, why won't they fund the V.A.? Why are they holding our veterans hostage? Why won't they fund the NIH? Why are they holding kids with illnesses hostage? That's a fight we can win because their position was unreasonable. On the other hand, what we did have is we have half the Republican conference on TV not making that point but instead making President Obama and the Democrats' point attacking the House Republicans, attacking those of us trying to stop Obamacare. That is a recipe that necessarily leads to losing. I hope going forward we don't follow that same path.

BASH: When do you make your intentions for the White House known?

CRUZ: Look --

BASH: What time is it?

CRUZ: My focus is entirely on the U.S. Senate. It's on substance. I get that everyone wants to talk politics.

BASH: Well - and you know, some trips to some of the first primary and caucus dates may be a little hints.

CRUZ: But you know, look, there's a reason for that which is the only way to win this fight and for that matter to win some of the other fights we've had is to energize and activate the grassroots of the American people. I've traveled all over the country the town halls and rallies to make the case to American people. You don't get two million people signing a national petition without going directly to the people. And what we're trying to do, listen, I think what we're trying to do is bigger than the economy, than the budget, bigger even than Obamacare. What we're trying to do is really change how Washington operates. The reason people are so frustrated is career politicians and both parties, they aren't listening to you and even more than that, the American people have the sense for good reason the system is rigged.

BASH: Senator, thank you. I have to ask you one newsy question before I let you go. Kathleen Sebelius. Some colleagues are saying she should resign. Do you agree with that?

CRUZ: Absolutely she should resign. Why? Because the program she implemented, Obamacare, is a disaster. It's not working. It's hurting people all across this country.

BASH: But isn't that helping you politically? I mean isn't that help you make your point that it's not the right program or policy?

CRUZ: It's interesting, Dana. That point you make and there are Republican gray beards that make the point let's just let this collapse. And then --

BASH: And they think you're stepping on their message. CRUZ: And then Republicans will benefit. Now look, I profoundly disagree with the message. I want to step on their message. Number one, you know, I consider that very -- the bad scenario here. Basically inflict a bunch of harm on the American people and hope we benefit politically from it, what a terrible cynical approach. I'm not interested in seeing the American people suffer just because my party might benefit politically if they blame the Democrats for the foolish policies that have been imposed.

BASH: Senator, thank you for your time.

CRUZ: Thank you, Dana.

BASH: Appreciate it.

(END VIDEO CLIP)

BORGER: And when we return, Republicans lick their wounds after this bruising debt ceiling fight. Do they have any fight left in them for anyone but each other? Our panel is next.

(COMMERCIAL BREAK)

BORGER: And when we return, the original maverick from Arizona and the new maverick from Texas. And a lot of space in between. Our panel weighs in on what is next for the grand old party.

(COMMERCIAL BREAK)

BORGER: And joining me now are our CNN commentators and political strategists Alex Castellanos, Donna Brazile and back again of course CNN chief congressional correspondent Dana Bash.

Dana, I've got to ask you about that interview with Ted Cruz. I was taking some notes here. He called Republicans gray beards, career politicians, didn't rule out another shutdown. And you heard John McCain say, you can't have another shutdown. It hurt his state.

BORGER: Hurt the party brand. Are they just living in alternate universes?

BASH: They are. The universe that Ted Cruz is living in is real for his world. I mean it really is. What I witnessed in Texas was unbelievable. There were women in tears when they saw him. Saying he was their hero. Saying he has finally -- there is finally somebody in Washington standing up to him. Remember just talking about the state that he represents.

UNIDENTIFIED FEMALE: Right.

BASH: There hasn't been a Democrat who won their statewide since 1994. I mean Obama lost by what 16 points in Texas. (INAUDIBLE) that could change ultimately but then take that constituency and you look at it around the country, this has helped his brand with that constituency. And that's who he's appealing to. (INAUDIBLE).

BORGER: Right. There's no doubt he is running, right?

BASH: Yes.

BORGER: OK. So Alex, the brand. OK, the brand, you've heard what John McCain said. This is killing our brand. Agree or disagree?

ALEX CASTELLANOS, CNN POLITICAL COMMENTATOR: If you want to see the effect of Ted Cruz on the Republican Party, look at Virginia. Where you have a tea party candidate, Ken Cuccinelli, running for governor and who is in the race. Tough race, uphill race a month ago. And then this happened. And what happens? A Republican brand drops about 10 points and Cuccinelli's campaign becomes very, very challenging.

BORGER: He says he's the new brand. Is that -- is that good for your party?

CASTELLANOS: Is Cruz the new brand?

BORGER: Cruz is the new maverick here.

CASTELLANOS: You know, it's -- I work for Jesse Helms years ago much he was Ted Cruz before Ted Cruz was Ted Cruz. But at that point, Republicans couldn't win anything. We were such a small minority. So it didn't matter if we went to extremes because we weren't going to win anyway. But then Ronald Reagan came along. We became a majority party. And what did Helms do? He didn't cut the Republican Party's knees off. He pitched in in a positive direction to get stuff done and grow the Republican brand. That's a lesson I think our party needs to learn. We're competing for leadership here and what may feel good in the base doesn't always help us achieve the things we want to achieve electorally.

BORGER: So that's a nice way of saying Ted Cruz is hurting the party.

CASTELLANOS: Well, he's got to learn the difference between standing for principle and standing in front of a train. And this has hurt, I think, the Republican brand in a -- you know, the Republican brand, whether you like it or not, is the political expression of conservative principle. And you can't sacrifice your political gains just for purity. We love -- we think as Republicans we're a party of principle and ideas. We love freedom. So we try to out pure each other. No, I love freedom more. And that -- the internal fire of dissent, we kind of warm ourselves with it. If we let it get out of control, it can burn our party down.

DONNA BRAZILE, CNN POLITICAL COMMENTATOR: Well the train wreck has been on going now for a number of years. And right now we're on Cruz (ph) control. But perhaps in a few months we'll be on some other control. Rand Paul or somebody else. The problem is is that the Republican Party doesn't really have any strong leaders right now who could say, stop it. Stop it to the tea party who clearly would like to run Washington, D.C. And they need to understand that the Republicans only control one half of one branch of the federal government. I don't look to Republican parties to provide any ideas, any leadership on these important issues. Whether it's immigration reform, whether it controlling our debt or even creating jobs, they're in such disarray, Gloria, that if you talk to Republicans today, tomorrow, they'll change their focus because there's really no focus inside the Republican Party right now.

BORGER: You know Dana, there was a poll this week in which just over half of the American electorate identified itself as somewhere in the center. Is there some kind of huge disconnect between where the American public is and what we've been seeing going on in the place that you cover every day?

BASH: Absolutely.

BORGER: How bad is that?

BASH: There's a huge disconnect. But I think -- I think maybe the conversations that Ted Cruz is having is different. It's not so much about the center or right or left. It's what you were talking about Washington establishment, gray beards, it's the bipartisan hatred and the fact that they're fed up in a bipartisan way with the way Washington is going. That's what he's trying to tap into. The populous anti-Washington sentiment.

CASTELLANOS: I think that's exactly right. And that can be the take away from this whole battle. Americans really are just frustrated with Washington. Nothing works in Washington. It wasn't just the debt crisis. It wasn't just the shutdown. It's the Obama care rollout. It's debt. It's education is a disaster. Social security is a mess. That anger against Washington needs to be channeled in a positive way.

BORGER: OK. Well, we'll leave that on a positive note until we come back in a minute. We'll be back. Ralph Waldo Emerson once said, if you build a better mousetrap, the world will beat a path to your door. So what about Obamacare?

(BEGIN VIDEO CLIP)

KATHLEEN SEBELIUS, HEALTH AND HUMAN SERVICES SECRETARY: I'll be the first to tell you that the Web site launch was rockier than we would have liked.

(END VIDEO CLIP)

BORGER: Can HHS secretary Kathleen Sebelius hold on to her job as Obamacare stumbles out of the gate? You heard what Ted Cruz said about that. More with our panel up next.

(COMMERCIAL BREAK)

BORGER: And we're back with Alex Castellanos, Donna Brazile and Dana Bash. Let me start with you, Donna. The president on a Sunday show this morning said -- I'm sorry. Jack Lew, the treasury secretary said about the president that there is no one more frustrated than the president at the difficulty with the Obamacare website. So how much of a problem is this now that we're stopping talking about the shutdown and starting to focus on this?

BRAZILE: Well it's unacceptable. The president is absolutely right. Healthcare.gov -- and I hate to give out the website, (INAUDIBLE) sign up right now, had 19 million unique visitors. There were a lot of glitches. A lot of surge. I'm not an expert on the internet. My ex-boss inspired it, Al Gore. But I've never actually got on to figure out all of the different lines of communication. Look this is a website problem. I think it can be fixed. For now, the program is in intensive care. They're going to fix these problems. But you know what's good is that in Connecticut and Kentucky, California, New York, people got onboard. They're signing up. So we shouldn't throw the baby out with the bath water. We are going to fix the glitches but the affordable care act is here to say.

CASTELLANOS: This is not a website problem. This is the way Washington works problem. Washington can't do anything. They had two years of meetings and meetings upon meetings and new regulations about the -- they can't manage their way out of a paper bag. The old top down way of doing things in Washington, hierarchy can't fix anything. This is the best Washington can do. This is the best Washington can do and not the worst. So the next election is going to be about that. Can we change Washington? Republicans are going to be the party of change. Democrats are going to be the party that says more of the same -- keep (ph) going (ph).

BORGER: Which Republican Party will be the party of change? Will it be the Ted Cruz party of change? CASTELLANOS: That's the one thing that unites all Republicans.

BRAZILE: The American people will never go back to the status quo where health care is 17 percent of our GDP. They're not going back and tell women that their pre-existing condition and they're not going to take children who are now on their parents' plan off Obamacare.

CASTELLANOS: And Republicans don't do that.

(CROSSTALK)

BORGER: Can you take them away from people? Can you take them away from -

BRAZILE: No.

BORGER: Can you take them away from people? I mean can members of Congress say, OK, you have this but now we're going to take it away from you?

BASH: I mean, you know, it's harder. It's like once you have it, it's much harder to take away. But I think the fact that this conversation is happening now and it is bubbling up, is making, I think, Republicans in your wing of the party happy and it's the reason why they were so unhappy with the shutdown because it buried this and it could have been even more of an issue that maybe it could have led to some of the reforms in Obamacare that Republicans want. CASTELLANOS: You have to thank the president for the Obamacare rollout. It is the only thing less popular than the Republican Party right now.

BRAZILE: Look. The Republican -- and here's what we have to thank Republicans for if we want to thank them for anything other than $24 billion that it cost us during the government shutdown. Look they are spending millions of dollars to stop the rollout of Obamacare. The Koch brothers and others are trying everything they can to stop this rollout, to prevent people from getting health care.

BORGER: I think the big question remains on the table is whether the penalties for late enrollment are going to be able to remain in place given the problems with the rollout. Thank you so much.

BRAZILE: To be continued.

BORGER: To be continued, definitely. Thanks so much to all of you for being here today. Coming up at the top of the hour, Fareed Zakaria's exclusive interview with former secretary of state, James Baker, who knows a little bit about bipartisanship. Back in a moment.

(COMMERCIAL BREAK)

BORGER: And thanks for watching STATE OF THE UNION. I'm Gloria Borger in for Candy Crowley. Head to CNN.com/SOTU for analysis and extras and if you missed any part of today's show, find us on iTunes. Just search, STATE OF THE UNION.

Fareed Zakaria, GPS, is next for our viewers here in the United States.